$8.5b investment plans in mining sector delayed due to legal uncertainty

Investment plans worth at least US$8.5 billion in mining sector have been delayed due partly to legal uncertainty in the country?s mining and forestry regulations, a senior official of the Indonesian Mining Association (IMA) has said.

Arif S. Siregar, the association?s chairman, told members of the House of Representatives?s Commission VII whose responsibilities include mining industry during a hearing in Jakarta on Tuesday that a number of the world?s major mining companies had cancelled their investment plans in Indonesia because of legal uncertainty.

?There should have been at least $10 billion in new investment flowing into Indonesia in 2009, if the government could have provided more conducive investment policy,? he said, adding that if the government could change the situation by removing all the legal uncertainty, the investment in the mining sector could reach as much as $25 billion in 25 years from now.

The delayed investments include Antam?s ferronickel processing project worth $320 million, Antam?s chemical grade alumina projects worth $220 million, Antam?s Hydromet project worth $1 billion, Dairi Prima?s zinc and black tin mining project worth $500 million, Rio Tinto?s nickel project worth $4 billion, Weda Bay-Eramet?s nickel project worth $2 million, the Mearest Soputan gold mine project worth $500 million and BHP Billiton?s coal mine project worth hundreds of millions of US dollars.

Arief, who early this week filed a resignation as the president director of PT Nickel Indonesia, said that the legal uncertainty mostly occurred due to a contradiction in the government?s mining and forestry policies.

The article 169 b of the Law No 4/2009 on mineral and coal, for example, states that mine concessionaire should adjust to the new law at least within a year after the implementation of the law, he said, ?While an article in the same law stipulates that the contracts (signed before the issuance of the new law) will be honored until the end of their terms,? he added. (*)